Cashback bill reaches £25m

Two more online retailers hit the wall this week, taking the total cashback bill to £25m since operators signed Ofcom’s code of practice last August.

The latest dealer troubles affect another 20,000 customers, which means more than 150,000 people have been hit by cashback misery in the last six months alone.

Liquidators were called into Simply3G this week, and Mobile Outlet wrote to customers informing them it would not be able to pay them any cashback.

One of the accountants dealing with Simply3G declined to comment on the number of customers affected by the collapsed firm, but sources have told Mobile that it owes 9,000 customers in the region of £1m.

Last week, Mobile Outlet - which stopped trading in November - followed Chatterbox’s example and released a statement saying it would not make any outstanding cashback payments until it is paid money it says it is owed by a distributor.

Mobile Outlet, which at its peak connected 2,500 customers per month, owes money to just over 10,000 customers. Company boss Attif Ashraf said customers would not be paid ‘unless somebody steps in’.

He said: ‘We were working on a 40% redemption, just like the rest of the market. There are going to be people saying we ran off with their money but it’s not the case.’

Another online retailer, First Contact Mobiles, has placed a recorded message on its telephone lines advising customers not to expect any payments soon. It claims its ‘financial resources have been drained’.

Further casualties are expected later this month, as retailers operating 40% redemption rates struggle to make enough new connections to pay the cashback they owe.